Asian currencies drop on Fed paring fears

Bloomberg

Sun, Nov 10, 2013 - Page 15

India’s rupee led losses in Asian currencies this week as overseas investors cut holdings of the region’s stocks on speculation that US policymakers will cut stimulus this year.

The Bloomberg-JPMorgan Asia Dollar Index fell 0.3 percent in the five days through Friday after a 0.5 percent drop in the prior period.

Third-quarter US expansion topped estimates and growth in service industries accelerated last month, data showed this week. Economists surveyed by Bloomberg on Oct. 17 and Oct. 18 predicted the US Federal Reserve would begin paring stimulus in March next year.

“Asian currencies declined this week as markets think the Fed will scale back its stimulus earlier than expected,” said Leong Sook-mei of Bank of Tokyo-Mitsubishi UFJ Ltd. “Flows are not coming back.”

Overseas funds sold US$1 billion more South Korean, Thai, Indonesian and Philippine stocks than they bought this week, data show.

In Taipei, the New Taiwan dollar slipped 0.1 percent to NT$29.505, compared with NT$29.47 on Nov. 1.

The Indian rupee lost 1.2 percent from Nov. 1 to 62.475 per US dollar, after hitting a five-week low of 62.7513 on Friday, prices from local banks compiled by Bloomberg show.

The Reserve Bank of India has cut direct US dollar supplies to oil refiners by 30 percent to 40 percent, Indian Secretary of Economic Affairs Arvind Mayaram said.

The rupiah had a second weekly decline after data showed Indonesia’s GDP rose 5.6 percent last quarter from a year earlier, the slowest pace since 2009. The nation recorded trade deficits in seven of the first nine months of the year.

The baht touched a four-week low of 31.515 per US dollar on Friday on concern that anti-government protests triggered by a proposed amnesty law for political offenses will deepen Thailand’s slowdown.

In other parts of the region, South Korea’s won fell 0.4 percent this week to 1,064.90 per US dollar, the yuan advanced 0.15 percent to 6.0905, the Philippine peso gained 0.1 percent to 43.188 and Vietnam’s dong was steady at 21,100.

Meanwhile, the US dollar rallied for a second week and touched an eight-week high due to the stronger-than-forecast US economic reports, while the euro posted its biggest two-week drop against the greenback in more than a year after the European Central Bank unexpectedly cut its main refinancing rate. The British pound rallied after the Bank of England kept its rate unchanged.

The Bloomberg US Dollar Index, which tracks the greenback against 10 major currencies, gained 0.6 percent to 1,021.66 this week in New York. It reached 1,024.31 on Friday, the strongest level since Sept. 13.

The euro fell 0.9 percent to US$1.3367, giving it a two-week decline of 3.2, the most since July last year. The shared currency weakened for a second week versus the yen, dropping 0.5 percent to ￥133.42. The Japanese currency dropped 0.4 percent against the US dollar to ￥99.05, its second weekly fall.

The pound rose 0.6 percent to US$1.6017 from the end of last week. It climbed 1.5 percent to ￡0.8345 per euro, the biggest rally since the week ended on April 26.

The euro has gained 5.5 percent this year, the best performer among 10 developed-market peers tracked by Bloomberg Correlation-Weighted Indexes. The yen has lost 10 percent, as the dollar has gained 4 percent.